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Gannett Co., Inc. (GCI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $571.6M declined 10.1% year-over-year (same-store -7.7%) and decreased sequentially vs Q4 2024 ($621.3M); GAAP diluted EPS was -$0.05, a miss versus S&P Global consensus of -$0.03, while revenue missed consensus of $593.1M. Management reaffirmed full-year 2025 outlook, citing improving digital trends into March and Q2 *.
  • Adjusted EBITDA of $50.5M (8.8% margin) fell year-over-year from $57.6M and vs Q4 2024 ($78.2M); free cash flow rose 7.6% to $10.2M, with operating cash flow up 3.8% .
  • Management highlighted headwinds unique to Q1 (Austin-American Statesman divestiture, exited operations, elevated revenue reversals, leap day comp) and expects a “marked improvement” in top-line for the balance of 2025 led by reacceleration in digital businesses; March was the best digital month of the quarter .
  • Capital structure improved: ~$75M of debt repaid in Q1; first lien net leverage decreased to 2.6x; April repurchase of $14M 2027 converts at 105% of par via delayed draw facility .
  • Potential stock catalysts: reiterated FY25 guidance, debt reduction trajectory to >$125M in 2025, DOJ antitrust ruling against Google potentially improving publishing ad economics; management views this as tailwind and supportive of Gannett’s own case .

What Went Well and What Went Wrong

What Went Well

  • Debt reduction and leverage: ~$74.5–$75.0M repaid; first lien net leverage down to 2.6x, sequentially -4.8% .
  • Free cash flow resilience: FCF grew 7.6% to $10.2M; cash from operations +3.8% to $23.3M .
  • Audience scale and product innovation: 195M average monthly unique visitors (+4.7% Y/Y); launch of Studio IX for women’s sports, AI licensing and syndication to monetize content (“We expect to continue stacking more of these high-margin deals… with Dow Jones, Microsoft, Amazon’s Alexa+”) .

What Went Wrong

  • Revenue headwinds: Total revenue -10.1% Y/Y; same-store -7.7% driven by asset sales (Austin-American Statesman) and exited operations; digital revenue fell -6.4% (same-store -3.8%) with elevated revenue reversals .
  • Profitability compression: Adjusted EBITDA declined to $50.5M (8.8% margin) from $57.6M (9.1%) Y/Y; sequentially down from Q4 2024’s $78.2M (12.6% margin) .
  • DMS softness and UK digital ads: DMS core platform revenue $108.2M and adjusted EBITDA $8.5M; Newsquest top-line impacted by local UK economy; management expects DMS near flat in Q2 and growth in H2 .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$635.8 $621.3 $571.6
Net Income ($USD Millions)$(84.8) $64.3 $(7.3)
Diluted EPS ($USD)$(0.60) $0.11 $(0.05)
Adjusted EBITDA ($USD Millions)$57.6 $78.2 $50.5
Adjusted EBITDA Margin (%)9.1% 12.6% 8.8%
Cash from Operations ($USD Millions)$22.5 $9.0 $23.3
Free Cash Flow ($USD Millions)$9.5 $3.8 $10.2

Actual vs S&P Global Consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD Millions)$593.1*$571.6
Primary EPS (GAAP, $USD)$(0.03)*$(0.05)
Adjusted EBITDA ($USD Millions)$51.0*$50.5

Values retrieved from S&P Global.*

Segment Revenues

Segment ($USD Millions)Q1 2024Q1 2025
Domestic Gannett Media$495.7 $440.1
Newsquest$60.2 $55.8
Digital Marketing Solutions$117.0 $108.7
Corporate & Other$1.6 $1.5
Intersegment Eliminations$(38.8) $(34.5)
Total$635.8 $571.6

Segment Adjusted EBITDA (Non-GAAP)

Segment ($USD Millions)Q1 2024Q1 2025
Domestic Gannett Media$44.5 $33.2
Newsquest$14.2 $13.9
Digital Marketing Solutions$8.8 $8.5
Corporate & Other$(9.8) $(5.1)
Consolidated Total$57.6 $50.5

Digital KPIs

KPIQ1 2024Q1 2025Change
Average Monthly Unique Visitors (Millions)186.3 (implied)195.0+4.7%
Digital Revenues ($USD Millions)$267.5 $250.4 -6.4%
Digital-Only Subscription Revenues ($USD Millions)N/A$43.3—
Digital Advertising Revenues ($USD Millions)N/A$83.4—
Digital-Only Paid Subscriptions (000s)2,017 1,931 -4%
Digital-Only ARPU (Total Gannett, $USD)$7.22 $7.22 0%
DMS Core Platform Revenues ($USD Millions)$116.1 $108.2 -7%
DMS Core Platform ARPU ($USD)$2,697 $2,693 Flat
DMS Core Platform Avg Customer Count (000s)14.3 13.4 -6%

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Total Digital Revenues (Same-Store Growth)FY 2025+7% to +10% +7% to +10% Maintained
Digital Mix of Total RevenueFY 2025~50% ~50% Maintained
Total Revenues (Same-Store)FY 2025Down low single digits Down low single digits Maintained
Net Income Attributable to GannettFY 2025Improve vs prior year Improve vs prior year Maintained
Adjusted EBITDAFY 2025Grow vs prior year Grow vs prior year Maintained
Cash from OperationsFY 2025>+30% vs prior year >+30% vs prior year Maintained
Free Cash FlowFY 2025>+40% vs prior year >+40% vs prior year Maintained
Capital ExpendituresFY 2025Increase for tech/products Increase for tech/products Maintained
Debt RepaymentFY 2025N/A>$125M expected (amortization, asset sales, FCF) New Specificity

Earnings Call Themes & Trends

TopicQ3 2024 (10/31/24)Q4 2024 (2/20/25)Q1 2025 (5/1/25)Trend
AI/Technology InitiativesScaling audience (203M UV), BetMGM partnership; product upgrades; DMS ARPU up Digital revs >45% mix; sustained digital growth; transformation progress AI licensing and syndication (Dow Jones, Microsoft, Alexa+), Dash enhancements; CRM integrations; emphasis on personalization and automation Expanding AI/licensing monetization; productization accelerating
Digital Audience & EngagementRecord 203M UV; digital revs +5.2% Y/Y 200M UV; digital-only subs rev +17% 195M UV; March best month; improving trends into Q2 Still strong scale; engagement initiatives underway
Regulatory/LegalRefinancing completed; leverage improved; outlook reiterated Preparing for asset sale (Austin); 2025 outlook DOJ ruling vs Google seen as structural tailwind; supports Gannett’s own case Positive long-term ad-tech tailwind
DMS TrajectoryCore revs -1.4%; ARPU +5.3% Core revs ~$116.2M; customer count down Q1 $108.2M; retention improving; expect near flat Q2 and growth in H2 Stabilizing and improving in H2
Regional TrendsNA and UK performance mixed; segment rev declines Digital-only subs +; same-store revs -5.5% UK digital ads slowdown affecting Newsquest UK softness; monitoring

Management Commentary

  • “With these items now behind us, we expect to drive a marked improvement in our top-line trends for the balance of the year, led by a reacceleration in our digital businesses.” — Michael Reed, CEO .
  • “We are reaffirming our full year 2025 business outlook… we believe we are well positioned to improve revenue trends, achieve a third consecutive year of adjusted EBITDA and free cash flow growth…” — Michael Reed, CEO .
  • “We expect to continue stacking more of these high-margin deals given the rich and diverse nature of our content… collaborations with Dow Jones, Microsoft and Amazon’s Alexa+ underscore that growing demand.” — Michael Reed, CEO .
  • “We do feel really confident about our guidance… starting to see improvements in the fundamentals of the business… stronger retention, more diversified revenue base, and operational efficiencies taking hold.” — Trisha Gosser, CFO .
  • “For the second consecutive quarter, we were the leading news and information provider among content creators in America… official launch of USA TODAY’s new sports vertical, Studio IX.” — Kristin Roberts, Chief Content Officer .

Q&A Highlights

  • DOJ vs Google case: management expects structural ad-tech remedies to increase transparency, CPMs, fill rates and publisher revenue share; views DOJ win as supportive precedent for Gannett’s own lawsuit .
  • Affiliate and partnership revenue amid Google “Manual Actions”: some contracts reset; leaning into owned content to reaccelerate affiliate revenue; broader diversification via AI licensing and syndication .
  • DMS outlook: sequential budget retention improved; Dash showing positive impact on retention; CRM integrations and search capabilities to bolster core product; expecting near flat in Q2 and growth in H2 .
  • Digital subscriptions: same-store growth but impacted by elevated revenue reversals; plans to reaccelerate via local engagement, lifecycle marketing, and automation (paywall decisioning, stop-saves, personalization) .
  • Asset sales pipeline largely complete; opportunistic deals only; free cash flow expected to fund debt reduction without pressure to sell strategic assets .

Estimates Context

  • Q1 2025 revenue missed S&P Global consensus ($571.6M actual vs $593.1M consensus); GAAP diluted EPS missed (−$0.05 actual vs −$0.03 consensus) *.
  • Adjusted EBITDA was roughly in line with S&P Global consensus (~$50.5M actual vs ~$51.0M consensus mean)* *.
  • Near-term consensus (directional): management guided improving digital trends into Q2; DMS expected near flat Q2 then growth H2, which may support estimate stabilization .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Reiterated FY25 guidance with improving intra-quarter digital trends suggests a potential second-half inflection; March strength and Q2 stabilization are important near-term signals .
  • Debt reduction remains a key de-risking lever; with >$125M repayment expected in 2025 and first lien net leverage targeted to approach ~2x, capital structure improves even amid revenue pressure .
  • DOJ ruling against Google is a prospective multi-year tailwind for publisher monetization; combined with first-party data, video focus, and direct advertiser relationships, Gannett can capture higher CPMs and share .
  • DMS fundamentals improving (retention, product upgrades, CRM/search, Dash penetration); watch Q2 for near-flat revenue and H2 for growth resumption .
  • Digital monetization diversification (AI licensing, syndication, verticals like Studio IX) provides higher-margin streams less tied to search; execution here can offset cyclical ad softness .
  • Short-term trading lens: misses vs consensus on revenue/EPS and Y/Y EBITDA down may cap near-term upside, but reiterated outlook and debt actions are positives; monitor Q2 trends and any updates on the Google litigation landscape .
  • Medium-term thesis: if digital mix reaches ~50% in 2025 and cash generation scales (>30% OpCF, >40% FCF growth), deleveraging plus improving digital margins can re-rate equity as transformation progresses .